Technology Sector Overview: 12/3/18

I am a big round number theory fan and the last 3 days of the week ending 11/23, which lost a large 4.3%, all CLOSED beneath the very round 7000 figure. That looks to be behind it, but could the very sanguine news on tariffs over the weekend by a sell the news event, or put the market back on the right track? This coming week shall let us know. This past weeks gain of 5.6% was the best in at least the last 5 years, and there have been just two others 5% handle weekly gains since this past week and they were both advances of 5.3% the weeks ending 10/24/14 and 2/16/18. The intraweek lows were not undercut that much, and the Nasdaq went on to achieve gains from that point on. The tech heavy index recorded a bearish death cross this week, but the Russell 2000 did that as well and has gone on to register higher lows from October, something the Nasdaq was unable to accomplish. Its 200 day SMA has been flatlining for a month and that is used by many to determine the overall market trend. The reaction this coming week should be very telling.

Cyber Security Names On Verge Of Big Move?:

What a week it was with only three major S&P sectors outshining the Nasdaq’s lofty weekly gain of 5.6%. Those included healthcare, technology and consumer discretionary and utilities, staples and real estate occupying 3 of the worst 4 actors. Software strength was hard to ignore with the IGV rising by 7.4%. The semiconductors, via the SMH, advanced by 6.4% and not to be outdone the HACK ETF, which monitors the cyber security names rose just better than 5%. When reviewing the top components of the fund I was surprised to see its representation among the top 5 dominated by “old tech” names. CSCO, FEYE, SYMC and JNPR were one, two, four and five. PANW, the 19th largest component in the ETF and 28% off most recent 52 week highs, this week put an end to a 10 week losing streak, even though it fell 3.9% CLOSING in the lower half of the weekly range. Below is the ratio chart comparing the HACK to the S&P 500 and it displays consolidation, which is admirable after some big drawdowns. The HACK daily chart shows a doji candle on 11/20, which often signals a change in the prevailing trend. CSCO looks solid just 3% off most recent all time highs as it approaches a 49.57 cup base trigger.

Examples:

The electronic components group remains strong, and one focused should be perked. We spoke of one of of favorites FN recently and it registered its fourth consecutive weekly CLOSE above the very round 50 number after a break above a long weekly inverse head and shoulders formation that aligned with the figure in a pattern dating back to February ’17. The complexion of the DAKT chart looks better, although we do not usually like to look at names below the round 10 number, as it is now on a SEVEN week winning streak. It is now sports a good looking WEEKLY double bottom trigger there with a potential pivot of 10/21 in a formation 14 months long. Below is the chart of VSH and how it appeared in our 11/26 Technology Report. It dealt with a round number of its own in the twenty figure, and last week eclipsed it and now looks poised to break above its upward sloping 200 day SMA.